Global Spirits Giant Diageo Calls Liquor Tax Hike ‘a Blow to Our Consumers’ but Remains Bullish on Business

File photo dated 08/08/13 of a general view of the London head office of drinks giant Diageo. (Photo: Jonathan Brady/PA Wire URN:29239431)

Diageo, the liquor conglomerate that owns myriad brands including Johnnie Walker, Guinness, Tanqueray, Smirnoff, Crown Royal, Baileys, Captain Morgan, Don Julio and Casamigos, is displeased with the United Kingdom’s decision to increase taxes on liquor purchases.

Diageo Managing Director Nuno Teles called the tax increase to £31.64 ($40) per liter of pure alcohol “a blow to our consumers,” The Spirits Business reported Friday. Nevertheless, the spirits giant feels good about its business and the way the industry is trending.

Teles said Diageo is still “optimistic” that its customer base will continue “asking for more, and aiming to drink more sophisticated, high-quality products” despite the tax hike.

“For the first time, we’re seeing a generation of 18-25-years-olds drinking as many cocktails as they are beer,” Teles said, according to The Spirits Business. “So in that context, taking alcohol duty up 10%, when 75% already goes into the government, it’s unnecessary, right? So we feel for our consumers, but we will continue to invest.”

Teles said UK consumers have been taking to tequila recently, which he called “a delight.” The enthusiasm, however, has led to a shortage of Casamigos, the popular brand from famous actor George Clooney. Diageo recently launched two new tequila products: Don Julio Rosado and Casamigos Cristalino.

“We’ve been so short of Casamigos, we really haven’t been able to add to the portfolio at all, so we’re quite excited by this,” Diageo CEO Debra Crew said about the release of Casamigos Cristalino. “It’s an aged Tequila, but it’s also filtered, so it has a very nice, smooth, creamy taste.”

The UK’s decision to increase taxes on liquor was met with an uproar from the industry. The Scotch Whisky Association described the tax as a “hammer blow for distillers and consumers” and asked the UK to reverse its decision — to no avail.

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